Challenges of ethical proxy sourcing: ways to ensure compliance and integrity.

      Proxy servers may not be widely recognized, yet they play a crucial role in the infrastructure of AI. A proxy server is essentially another device with its own IP address that allows users to access the internet. Collectively, they enable automated browsing of multiple webpages without running into CAPTCHAs or other obstacles. Without proxies, companies would struggle to gather sufficient training data for large language models, causing AI agents to falter on many tasks.

      However, with great power comes significant responsibility. If sourced irresponsibly, proxies can turn computers into unintentional botnets. When misused, they can overload websites, create fraudulent social media accounts, or contribute to data theft. Like any powerful tool, they can either be beneficial or harmful, highlighting the essential need for proper governance.

      Proxyway, a site focused on web data collection infrastructure, closely monitors the proxy server market and shares its findings in an annual, publicly accessible proxy server market report. This article, based on that report, discusses the potential risks of selecting an unethical provider and offers guidance on how to avoid such choices.

      The Role of Proxies in AI

      Proxies have existed for many years, primarily used as tools for anonymity since the early 2000s, and perhaps even before. In the past decade, however, the proxy server industry has experienced substantial growth. They serve as the foundation for businesses that compare flight prices, conduct market research, and assist companies in evaluating their Google search rankings, among other uses. Today, the largest proxy server providers generate hundreds of millions in revenue, contributing to a multi-billion dollar market.

      While the industry was thriving prior to the rise of AI, the substantial investments in AI companies like OpenAI, Anthropic, and Perplexity have amplified its growth. Language models require vast amounts of data for training; the web is the largest data reservoir, and proxies significantly accelerate data collection processes. The increased demand has enabled major proxy providers, such as Bright Data, to achieve $300 million in annual recurring revenue, with a growth rate of 50% per year.

      The Risks of Residential Proxy Networks

      Residential proxies are considered the most sought-after type of proxy server due to their ability to bypass automated access restrictions imposed by websites, which often use tools like Cloudflare to protect their data. Unlike data center-hosted proxies, residential proxies are less likely to face blocking because they resemble home computers connected to internet service providers like Comcast or Verizon.

      The intriguing aspect is that residential proxies truly originate from home computers. They are derived from users' laptops, smartphones, and other devices. A proxy provider uses a user's IP address and a limited amount of data, enabling clients to access websites pertinent to their business. In this scenario, that IP address acts as a proxy, and the users’ devices function as servers.

      Some readers may be concerned about unknowingly participating in this system. Ideally, those sharing their connection should be aware of and benefit from the arrangement. Regrettably, this is not always the case, as unethical proxy server operators may utilize methods like malware installation, repackaging pirated software, offering free VPN services, or even selling vulnerable smart devices. Essentially, they create botnets.

      In recent years, several large-scale botnets have emerged, some comprising tens of millions of devices. Examples include BADBOX, which impacted millions of inexpensive Android TV boxes, and Aisuru. Recently, authorities in the Netherlands dismantled the ASOCKS botnet, which encompassed more than 17 million devices.

      Many of these botnets operate on the dark web, where they are exploited for malicious purposes. For instance, Aisuru was responsible for some of the largest distributed denial of service (DDoS) attacks seen online. Moreover, they are frequently monetized as commercial proxy services, making it challenging to differentiate them from legitimate providers. In January 2026, Google shut down ten proxy server brands based in Hong Kong, and the ASOCKS botnet had a storefront sharing the same name.

      Malicious proxy networks breach the trust and property of individuals without their consent, which is both reprehensible and potentially dangerous. Commercial entities that unknowingly source from such vendors face risks to their reputation and network security. Meanwhile, botnet operators risk incarceration, but at least they are fully aware of the risks they take.

      Identifying Reliable Proxy Services

      So, how can one differentiate between a trustworthy proxy server provider and a botnet storefront? This task can be challenging, yet prominent market players have implemented significant measures to self-regulate their infrastructure procurement and usage.

      The first step in confirming legitimacy is to examine residential proxy acquisition. The ideal approach for sourcing such IPs ensures that the original provider is informed, consents to the arrangement, and receives compensation. Bandwidth sharing applications like Honeygain or TraffMonetizer exemplify this practice, focused on exchanging money for user traffic.

      Another method is through SDKs—small pieces of code embedded in widely used desktop or mobile applications. Developers often view